Auto sales hit five-year high of 14.5 million in 2012

DETROIT -- Strong U.S. sales in December capped a remarkable year for the auto industry -- especially Japanese brands -- and 2013 should be even better.

Sales of new cars and trucks are expected to total 14.5 million after all carmakers announce figures on Thursday. That is 13 percent better than 2011 and the best performance in five years.

In 2012, Americans had plenty of incentive to buy new cars and trucks. Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in. Banks made that easier by offering low interest rates and greater access to loans, even for those with lousy credit.

"The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment," said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.

Year-end deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 10 percent to more than 1.3 million, auto pricing site TrueCar.com predicted. That would translate to an annual rate of more than 15.6 million, making December the strongest month of 2012.

Toyota, which has recovered from an earthquake and tsunami in Japan that crimped its factories two years ago, said Thursday that sales jumped 27 percent for 2012. December sales were up 9 percent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.

Advertisement

Honda sales rose 24 percent for the year. Nissan and Infiniti sales were up nearly 10 percent as the Nissan brand topped 1 million in annual sales for the first time.

Volkswagen led all major automakers with sales up a staggering 35 percent.

Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury car.

But full-year sales at Ford and General Motors lagged. GM's rose only 3.7 percent for the year, while Ford edged up 5 percent. For December, GM sales rose 5 percent, while Ford was up 2 percent.

GM executives said the company has the oldest model lineup in the industry, yet it still posted a sales increase and commanded high prices for its cars and trucks. The company plans to refurbish 70 percent of its North American models in the next 18 months and expects to boost sales this year.

North American President Mark Reuss said the company won't give away cars and trucks with discounts like it has in the past, especially when it's in the midst of its biggest product update ever.

"Give us 18 months and you're going to see the whole portfolio turned," said Reuss.

Ford said that even though the fiscal cliff deal raised tax rates on individuals making more than $400,000 and couples making more than $450,000 a year, it doesn't see a huge impact on auto sales.

Its chief economist, Ellen Hughes-Cromwick, said only 2 percent of new-vehicle buyers have income in that upper tax bracket, and they tend to purchase even if there is a change in their after-tax income.

She said Ford is more concerned about an increase in the payroll tax, which is scheduled to bounce up to 6.2 percent this year from 4.2 percent in 2011 and 2012. That amounts to a $1,000 to $1,500 tax increase per household, she said.

"We will look at that closely because it will crimp spending in the months ahead," she said.

December featured year-end deals on GM's big pickup trucks; the company offered discounts of up to $9,000 to help clear growing inventory. The move worked. GM cut its full-size pickup supply by more than 20,000 in December to about 222,000.

Overall, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.

The year's sales of 14.5 million were far better than the bleak days three years ago when they fell to 10.4 million, a 30-year low as the economy tanked and GM and Chrysler went through bankruptcy protection. But sales still aren't back to the recent peak of around 17 million in 2005.

The Polk auto research firm predicted even stronger U.S. sales for 2013, forecasting 15.3 million as the economy continues to improve. Polk, based in Southfield, Mich., expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.

The firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are strong and introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.

But the firm's optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.